Osteoinductive characteristics of bone grafts are important for enhancing osseous healing at grafted defect sites. The cholesterol-lowering drug simvastatin has been shown to stimulate bone formation by increasing the gene expression of bone morphogenetic protein-2 and vascular endothelial growth factor. The purpose of this study was to determine the effect of local simvastatin application on bone defect healing and compare the amount of new bone produced by simvastatin gelatin sponge graft with that produced by a gelatin sponge graft and with natural healing. Twenty-one bone defects at 3 mm diameter were created in the angulus mandible region of Wistar albino rats. In the experimental group, nine defects were grafted with simvastatin dissolved in water mixed with a gelatin sponge. In the control groups, eight defects were grafted with water mixed with a gelatin sponge alone (active control) and six were left empty (passive control). Animals were killed on day 14 and the defects were prepared for radiologic and histologic assessment. Density of the regenerate was evaluated by peripheral quantitative computed tomography. The density of the experimental group was 240% more than the passive control group and 190% more than the active control group (P < 0.01). Histologic examination also showed more new bone formation in the experimental group than control groups. In conclusion, the simvastatin gelatin sponge enhanced bone defect healing in the mandible of rats.